FHA loans are mortgages issued by FHA qualified lenders only. These loans are insured by the Federal Housing Administration (FHA). This insurance provided by the federal government allows lenders to lend more freely by assuring them they will be repaid in the event of default.
“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87 percent today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”
FHA loans are:
1. Not Only For Lower-Income Borrowers. There is no maximum income restriction associated with FHA loans. All borrowers still need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are truly able to afford their future homes.
2. Not Only For First-Time Buyers. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.
3. Not Just Small Loans.The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.
4.Often More Affordable Than Conventional Loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5 percent.
5. More Desirable To Buyers of FHA Approved Condo Developments. With 87 percent of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.
6. Assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.
7. Holding properties to a higher standard. An FHA approved appraisal must not only determine value of the home but also inspect the home for health and safety issues. Such potential issues could be holes in walls, damage to flooring, or broken windows. All of which are fixable but, is the seller willing or able to fix anything? If there are any doubts prior to making your offer, ask your lender about a 203k loan program to make the necessary repairs to purchase the home.
Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best option. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.
Even FHA loan requirements can change. You may contact an FHA qualified lender for up to date FHA & 203K loan information. See if you’re eligible. One FHA qualified lender I can confidently recommend is Cheryl Barber with On Q Financial. 520-421-0004 or email her at email@example.com.
Find more information about the FHA- approval process at www.getfhaapproval.com.